THE CHAIR OF BOARD
Is your CEO empowering your organisation or acting as a handbrake?
Harvard researchers report that “40 percent of new CEOs depart within 18 months of their appointment, while 64 percent depart within four years”. This transition can be highly expensive. “The cost of replacing a CEO can range from several million dollars for small-cap firms, to tens of millions of dollars for large-cap firms.”
Unfortunately, many recruiters (except for one or two, who are the very best) are akin to high-end real estate agents. Their motivations are typically two-fold. First, how to place someone they have placed before, so they can maintain an ongoing relationship, thereby ensuring a future pipeline of business. Second, how to make a ‘placement’ as quick and as effortless as possible. The problem with recruiters is that most have never worked in a company and wouldn’t really know how to recognise a great leader beyond a ‘good look on LinkedIn’.
The reality is that great CEOs are not always the shiny ones. The best build a highly effective senior leadership team, through whom they drive high performance results. The worst are the John Wayne narcissistic types, who look cool, say the right things and speak in MBA techno-jargon.
Once the honeymoon is over, it becomes very clear to the Board that they are at risk of the new CEO becoming a single point of failure.
“The Chief Executive of a NZX listed company was dumped in July 2017,
after the company slashed it’s forecasted operating profits by several hundred million dollars.
The Chairman of the Board was asked:
“What type of CEO are you looking for?
Is it someone who takes more costs out, consolidates, restructures or looks to grow?”
NZ HERALD BUSINESS
WHY THIS HAPPENS
If you are a Board Chair and this story sounds familiar, you are not alone. Many Boards find themselves in the same boat and unfortunately, it’s the Chair who bears the brunt of the problem – and it is not their fault.
There are several contributing factors:
Firstly, the Board sub-committee undertakes the search without updating its strategic view of the business and identifying which phase it is in – factors that are key to the selection criteria.
Secondly, the search firm lacks an ‘evidenced-based’ process for measuring the strategic leadership capabilities of CEO candidates and ensuring they are ‘in–sync’ with the business lifecycle phase.
Thirdly, the Chief Executive is a high achiever, but lacks the leadership skills to galvanise a team.
Fourthly, the senior management lack a digitally integrated performance platform that provides them and the Board with transparency around the key performance drivers, and identifies which teams and team leaders require immediate attention.
AS THE BOARD CHAIR, ARE YOU EXPERIENCING ANY OF THE FOLLOWING CHALLENGES?
Most Board Chairs grapple with these challenges at one time or another. Unless these issues are sorted out, the company will be unable to generate the power required for forward motion.
CALL US TO DISCUSS SOME OPTIONS THAT MIGHT SUIT YOU
If you are a Chair and want to arrange a confidential discussion with our Chair Specialist, call +64 9 366 1560 or email email@example.com to set up a time to meet with our Chair Specialist in our LeaderLAB, or over Skype.
SHARE THIS STORY WITH COLLEAGUES : You are welcome to share this Chair of Board story with your Chief Executive, Head of HR, Senior Executives or another Chair, if they would find it of interest